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Volume 69, Number I Editor: Adina Conn FEATURES On the Cover: Video games, indicative of the 1980s, exemplify 4 The 80s-Economic The 80s put forth a decade of growth and forces consuming the title industry. Prologue to What? consolidation for the nation. How did the eco­ With Japan as a strong economic nomic climate of the past decade affect the title force, what will be the next move for industry? What issues can members anticipate in the 90s? These and other pertinent issues are dis­ those in the industry? cussed by an expert allied with the title industry. Cover Illustration by Mark By Nelson Lipshutz, Ph.D Stutzman. An East Coast illustrator, Mr. Stutzman has become a 8 Megabucks and Caught in megabucks transactions, states are contributing illustrator to Title News. Reinsurance fighting to protect the insureds. Written by a spe­ He is the recipient of numerous cialist in the field , learn how megabucks title in­ awards in the advertising and surance deals happen through the efforts of title reinsurance. communications field. By Janice D. Walton

12 An Oasis in the Information Recently, there's been a breakthrough in the Standards Desert standards of reporting forms among the under­ writers and agents. Read about the current status of the Association's Generic Reporting form, and how it can help to benefit you. By Frederick H. Hemphill, Jr.

1 7 The Makings of an Ever wonder what goes into the interviews that Interview you read in Title News? Or, are you curious how journalists get from point A to point Z in their interview process? A candid and humorous behind-the-scenes look at the makings of inter­ views are revealed in this article by Title News' editor. By Adina Conn

20 TIPAC Kicks off "Campaign State Trustees of the Title Industry Political Ac­ 1990" tion Committee gathered from all corners of the nation in Washington, DC, for one of the most successful political gatherings in the industry. Read all accounts of the meeting, and learn what you can do to support your Association's PAC. By Robin E. Santangelo

DEPARTMENTS

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ASSOCIATION omcERS President Richard P. Toft, Chicago Title Insurance Company, or many years I've been an admirer of the great Chicago, Illinois Irish playwright John B. Keane. He begins his Self President-Elect F Portrait as follows: Bill Thunnan, Gracy Title Co., Austin, Texas "I was born on the 21st day of July, 1928 in the town of Listowel, in County Kerry. Apart from my birth, it was Chairman, Flnance Committee year, free of plague, war and famine." David R. Porter, Transamerica Title Insurance Company, an uneventful Los Angeles, Calilomia What a wonderful choice of verbiage! Since this is my first of hopefully several future commu­ Treasurer nications, perhaps I should paraphrase the above Parker S. Kennedy, First American Title Insurance my background. Company, Santa Ana, California wordsmith with a bit of I survived intussesception when I was 9 month old. At Chairman, Abstracten and the ripe age of 6, I was kidnapped in Gary, Indiana. My Tide Insurance Agents Section first illegal job was making lists of names appearing on Richard J. Oliver, Smith Abstract & Title, Inc., Green , these individuals dutifully voted Bay, Wisconsin gravestones of all those who had recently died. Then in the next elections. My first legal job was hoeing tomatoes along with German Chairman, Tide Insurance Afrika Corps prisoners of war during WW II (as Archie Bunker would say). When I Underwriters Section was 15, I spent half a summer in a fire tower in the Idaho panhandle and the other Richard A. Cecchettini, Title Insurance Co. of Minnesota, of Montana. I loyally served my tour of Minneapolis, Minnesota half on a sheep ranch in the Madison range duty during the Korean War which was followed by a joyful marriage and the raising Section Representatives, of our family. Last year, in addition to becoming a grandfather twice, my beloved Board of Governors had to have open heart surgery. Her recovery was phenomenal so we de­ Mike Currier, Guaranty Title Company, Carlsbad, New spouse Kitty Francisco for ALTA's Convention and have Mexico cided to go on vacation. I took her to San finished shaking yet! Barbra Gould, Ford County Title Company, Dodge City, not quite always began his monologue on A Prai­ Kansas The lovable and homespun Garrison Keillor rie Home Companion with "It's been a quiet week in Lake Wobegone. " I hope our fu­ William T. Seitz, Ticor Title Insurance Co., Los Angeles, Keillor's may have been or imag­ California ture will be as tranquil as both Mr. Keane's and Mr. ined. Herbert Wender, Commonwealth Land Title Insurance you is "involvement." This Company, Philadelphia, Pennsylvania The principal comment I would like to discuss with Association thrives because of the hundreds of truly dedicated individuals giving of Immediate Past President their time and wisdom to make ours a better profession. We all have a wonderful Charles 0. Hon, Ill, The Title Guaranty & Trust Co. of opportunity to serve on the various committees in both ALTA and our affiliated state Chattanooga, Chattanooga, Tennessee associations. I encourage each of you to become involved in those areas in which you ASSOCIATION STAFF may feel most comfortable. I know that you will find a deeper understanding of your spinoffs is the opportunity to meet Executive Vice President profession and Association. One of the wonderful James R. Maher so many new and interesting people-individuals who later become lifelong friends. Involvement need not be limited to our chosen profession. Try to become active in Vice President-Public Alfa1n your various civic associations, in your home communities-your local church, tem­ Gary L Garrity ple, PTA, etc. You'll all feel a lot better from the positive results of your collective in­ Director of Research volvement in both your professional and local environments. Richard W. McCarthy Many years ago I had the opportunity to guide canoe trips in the Canadian bush. General Coumel An unwritten rule was "Always leave your last campsite in better condition than you Phyllis K. Slesinger found it." That's not bad advice for both our professional and personal lives. Director of Government Relations Robin E. Santangelo Vice President-Administration David R. McLaughlin Director of Education And Membership Services Patricia L Bennan Director of Meetings And Conferences Dick Oliver Leigh Vogelsong Editor, Tdle News Adina Conn

3 The 80's-Economic Prologue To What?

by Dr. Nelson R. Lipshutz

osses, con men, insolvencies of lenders and title course, was deteriorating loss experience (of which more later). underwriters, collapse of the housing industry, debt­ Another was the general labor market tightness that drove up the Lswollen conglomerates eating up the independent cost of clerical labor that is the biggest element of the title titleman and then expiring of financial indigestion, the final insurance company's costs. A third was the need for the industry triumph of a resurgent Japan, the end of the world, right? to absorb the expense of widespread computerization. Yes. Paradoxically, these last two reasons for industry unprofitability And no. suggest that there is much hope for the future. Rising labor costs Trying to make sense of the past decade is particularly difficult were the stimulus for the response of widespread industry in an era in which the cacophony of the mass media lifts form to computerization. It is particularly striking for an outside observer the status of substance and buries rational discourse in a sea of who has been watching the industry for almost 20 years to see the froth and hype. Newspaper headlines make lousy economic remarkable level of computer sophistication that now history; 20-second sound bites are even worse. characterizes even the smallest title offices. Further, the explosive It is fashionable among popular commentators to decry the growth in the number of vendors offering title insurance software present and bemoan the future based on a madly shifting and systems, from closing packages to title plants, is providing the perspective, always adjusted to place the worst possible industry with a rapidly improving price structure. The title construction on today's big event, whatever it is. But insurance industry is much better positioned to control its clerical understanding the economic position of the title industry at the costs today than it was 10 years ago. start of a new decade demands that we reject such gloom­ mongering and take a longer view. To understand where we are, Losses we must also ask where we've been, and see where we might go. At the end of the 70's, overall loss experience in the U.S. title insurance underwriting business was running at around 5% of title Economic Climate revenue. By the end of the 80's, losses were running at around 9% The 80's were actually a decade of growth and consolidation, of revenue. not of collapse and decay. For the country as a whole, GNP grew Much of this worsening of loss experience was attributable to from $2 .7 trillion in 1980 to almost $5 trillion in 1989. A trillion fraud linked to the unmonitored expansion of the newly dollars is a lot of money, even these days. The inflation rate deregulated thrift industry into markets it had neither the dropped from over 9% to under 4%, so that real GNP growth over resources nor the experience to manage competently. With the the decade was in excess of 30%. At the same time, the U.S. collapse of the thrift bubble and the re-emergence of responsible population grew from 227 million to 249 million, or less than 10%, regulation, some portion of this problem may turn out to have so that real GNP per capita increased almost 20%. Simultaneously, been transient. But there is no question that a general decline in the unemployment rate dropped from over 9% to under 5%. To private business morality besets the nation, and the deep pocket paraphrase Mark Twain, reports of the demise of the American of the title industry has been discovered by the scam artists. economy are greatly exaggerated. Another substantial contributor to the unfavorable trend in loss This sustained expansion has been shared by the title insurance experience was the continuing expansion in the courts' industry. Over the decade, gross title insurance revenues have construction of the limits of underwriter liability, a continuation of risen from about $1.3 billion to about $4 billion, a much larger the consumerist trend that dates back to the 1960's. While the rate percentage increase than that of the economy as a whole. This of expansion of the boundaries of liability may moderate, there is robust growth in volume was not, unfortunately, accompanied by little chance that the limits will retreat behind their current a corresponding growth in industry profits. Indeed, the 80's were a position. veritable profitability roller-coaster; tremendous operating losses So losses are bad-but how bad? Surprisingly, from an in the first few years of the decade were followed by moderate underwriting perspective, not as bad as one might think. This is profits through 1987 and a collapse of profitability at the end of not the first time that industry losses have surged in response to a the decade. building boom. Remember the construction boom of the mid- 70 's? Industry loss ratios in 197 4 and 1975 were just about as high Operating Costs as they were at the end of the 80's, with hot spots of trouble. There were a variety of reasons for the disappointing profit performance of the title insurance industry during the 80's. One, of continued on page 6

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...... North American Title Organization, Inc...... ~ ••••••••••••••••• •N•A•T•o• • A dminis trative O ffices: 2 1 0 U niv ersity Drive, Suite 900, Cor al Springs, F lorida 33071 • • • • • .O . Box 407003, Fort Lauderdale, F lor ida 3 3 340-7003 • • • • • • Mailing Address: P ••••••••••••••••• • N a t iona l Toll Free: 1- 800- 992- 9 6 52 • Fax: [305) 3 4 4-7961 ••••••••••••••••••••••••••••• continued from page 4 company parents. The past decade has seen the entry of diversified industrial companies, private investors, information Colorado loss ratios in the mid- 70's looked like Texas loss ratios in services companies, and even consortia of title company the late 80's. But two things were different about the experience of employees into an ownership role in the industry. This multiplicity the 80's. of capital sources augurs well for the future. First, the increase in losses was not simply a transient surge-it was a secular shift. Higher losses are here to stay. Issues for the 90's Second, the absolute dollar magnitude of title losses has Someone once said "It is difficult to make predictions­ exploded to the point that a particular loss ratio percentage means especially about the future. " Nonetheless, it seems clear that something entirely different in terms of title industry solvency than certain issues will dominate title insurance over the next decade. it did 10 years ago. The need for additional capacity, both to repair the overall Through the 70's, the ratio of annual losses to industry assets writings to surplus ratio and to insure "mega-projects," will be the was about 6-1/2%. But the 80's saw a sustained upward trend in key issue of the 90's. While a hungry reinsurance market will this ratio to about 15%by the end of the decade. In terms of equity, accept more of the industry's risk than it does today, reinsurance the situation was even more extreme: a ratio of losses to surplus of alone will not meet the industry's capacity needs. Continuing 10% in the 70's had risen to 35% by the end of the 80's. In other industry consolidation will make it possible for individual words, the title industry has pressed its capi tal base, and companies to retain larger risks, and can lead to improved particularly its equity base, harder and harder to support an profitability that can expand the industry's total capital base increasing volume of premiums, to the point at which a moderate through earnings retention. But internal funds generation will not fluctuation in losses can threaten the stability of an underwriter. provide all the capital the industry will need. New capital infusions For the small underwriter, a given percentage surge in losses, will be needed from outside the present boundaries of the title which surplus used to be adequate to absorb, will now drive an insurance industry, and the industry must keep an open mind underwriter into insolvency. when new players appear on the horizon. The title insurance industry is in the early stage of a transition Capital attraction requires profitability. Profitability, in turn, from a loss-preventing to a loss-paying line of insurance. Now, that requires rate adequacy. While the industry is in a better position to is not a reason for weeping and wailing and gnashing of teeth­ control and predict its costs now than it was at the beginning of loss-paying lines of insurance have operated for the past 4,000 the decade, it cannot become profitable unless it maintains rates years, from ancient Phoenicia to the modern U.S. What the 80's adequate to cover these costs. The 90's will require increasing have taught is that a loss-paying line with a volatile loss profile concentration on rate issues, and a concomitant re-examination needs a much bigger capital base than the title industry currently of the rate regulatory environment. In states in which the rate possesses. regulatory framework cannot ensure rate adequacy, the industry will need to work actively to change it. The prospects for success Ratemaking in this effort are bright. Legislative and regulatory bodies have The title insurance ratemaking environment changed markedly recognized the reality of the threat of insolvency that during the 80's, but without establishing any clear trend. Rating contemporary financial institutions face when their profits Bureaus, whose growth had been the dominant ratemaking theme decline, and have become acutely aware of insolvency's costs to of the 70's, vanished almost overnight in response to the anti-trust the public. challenge posed by the Federal Trade Commission complaint, In many ways, the 90's will bring a return to traditional business suggesting that individual companies would become the values-financial conservatism and bottom-line realism-and the dominant force in keeping responsive to changing economic and elimination of much of the smoke and mirrors. It will not be an market conditions. At the same time, a countervailing movement easy decade, but the title industry can expect to emerge leaner, developed with the strengthening of the role of state promulgated stronger, and smarter, and ready for the new millennium. rates in the overall rating mix. State promulgation of title insurance rates, closely following the Texas model, was enacted and implemented in New Mexico, and the pre-existing promulgated The author is president and founder of the Regulatory Research Corpora­ rate system in Florida became significantly more active. tion, located just outside Boston, Massachusetts. Prior to founding his own firm in 1977, Dr. Lipshutz worked with the staff of Arthur D. Little, Inc. During Ownership that time, he worked with the ALTA Research and Accounting Committees in the development of the first Uniform Statistical and Financial Reporting Sys­ Over the decade of the 80's, public policy caught up with the tem adopted by the title industry. results of recent decades of economic research, resulting in a The author has earned a doctorate from the University of Chicago, and has benign eye being turned on mergers and acquisitions that allowed served on the faculty at Duke University before moving to the staff of the Man­ larger firms to exploit the economies of scale that are now known agement and Behavioral Science Center at Wharton School, where he holds an MBA in Finance. to pervade the economy. Perhaps the "big is good" idea has been pushed a bit far; perhaps the LBO techniques that have been used to finance some of these consolidations have not been sufficiently prudent. But there is little question that consolidation in many sectors of the economy made good economic sense. The title insurance industry has taken some part in this process, with several old familiar names fading away with their mergers into larger and stronger firms. But a more interesting development has been the entry of new types of investors into the title insurance underwriting business. Gone is the dominance of banks, trust companies, and insurance holding companies as title insurance

6 Your S4!Clrch Ends Here

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Endorsed by ALTA, Owned by ALTA Members Megabucks and Reinsurance

by Janice D. Walton

he Megabuck transactions ... The dollars are mind-bog­ The reinsurance agreement gling! The contract whereby the reinsurer, for consideration, agrees to T Two years ago, you heard about the leveraged buy-out indemnify the ceder against any loss sustained under its title insur­ of R.H. Macy & Co. for more than $2 .5 billion. This debt was ance policy is known as a reinsurance agreement. The form most secured in good measure by mortgages on 70 of the Macy's and often used is known as the ALTA Facultative Reinsurance Agree­ other stores owned by the company. During the past 12 months ment (10-21-87). This agreement contains direct access provi­ alone, a small sample of major transactions produced title insur­ sions which enable the insured to obtain payment from the re­ ance liabilities totaling more than $2 .2 billion. The transactions insurers directly in the event of a claim in excess of the ceder's involved the sale/leaseback of the Kroger Grocery Stores (130 primary liability. sites, $595 million) and loans on the Trump Taj Mahal in Atlantic Liability under a reinsurance agreement is layered. For example, City ($575 million), the old Madison Square Garden in New York the first layer of the risk is retained by the ceder as primary liability. City (more than $600 million), and the Peachtree Center in Atlanta The balance of the liability is usually placed on the secondary ($408 million). The 1988 Campeau LBO, which is again in the level. Of the secondary liability, the ceder may retain an additional news, was in excess of $1 billion and involved 60 sites. amount and cede the balance to other title insurers. There is also a To protect insureds, most states have adopted statutes restrict­ tertiary agreement and a quaternary agreement which follow these ing the amount of liability title companies may retain on a single same principles and layer the liability in three and four layers, risk. Also, the assets of an individual title insurer cannot support respectively. A tertiary agreement is generally used for transac­ the insurance liability on the large transactions occurring today. tions with a single risk in excess of approximately $275 million Based on these facts, how do the megabuck title insurance deals and a quaternary agreement is generally used when the risk ex­ get "done?" The answer is simple-title reinsurance. ceeds $600 million. The sum of the ceder's primary liability and its Although reinsurance is a critical element of the title insurance share of the secondary, tertiary and quaternary liability is known business, it is often regarded as arcane and outside the main­ as its "retention." stream. The discussion that follows provides a nuts and bolts look When there is a loss in excess of the underwriter's primary at title reinsurance and takes you through a sample transaction. liability, the secondary liability pool members are liable for a share of the loss based on the ratio of their individual amounts of What is reinsurance? secondary liability to the aggregate of secondary liability. When In a reinsurance transaction, the company issuing the title insur­ tertiary agreements are used this process is carried through a third ance policy, the ceder, assumes primary liability for the policy level and quaternary agreements have four levels. Before moving amount. However, the ceder then "lays off" a portion of the risk, to the next level, the entire level's liability must be exhausted. It is generally, on one or more other title companies who, for a price, important to note that each company is liable for its proportionate agree to indemnify the ceder for the amount of the risk assumed. share of a loss. The ceder determines how much of the total liability it can retain based on self-imposed risk retention limits, customer-imposed Retention limits retention limits, and state-imposed retention limits. "Facultative" Many large institutional lenders review each title insurer's NAIC reinsurance is contracted for on a case-by-case basis and is used Form 9; title insurance companies file these annual statements in by the large title insurer for large transactions. Smaller scale re­ every state where they are licensed to do business. The lenders' insurance can be performed on a "treaty" basis whereby a re­ reviews entail detailed analyses of assets and liabilities to make gional title insurer will "lay off" a portion of its risk on all transac­ their own determinations of a title insurer's liquidity. The retention tions over a certain amount with another specific regional or limits set by these lenders are usually more restrictive than limits national title insurer. set by state statutes and the ceder's self-imposed retention limit. Reinsurance differs from coinsurance. Coinsurance is used by A ceder's self-imposed risk retention limit is usually based on the insured to spread a single risk between two or more title companies. Each issues a title insurance policy in its allocated text continued on page 26 amount; each is primarily liable on its own policy although a coinsurer may turn around and purchase reinsurance on a portion The author is vice-president-reinsurance for lawyers Title Insurance Cor­ of its share of the transaction. Both reinsurance and coinsurance poration, Richmond, VA. She joined lawyers Title in 1985 at its national head­ protect the insured and the title insurer by recognizing the pos­ quarters as reinsurance administrator, and was promoted to assistant vice­ sibility that claims could occur on several large transactions within president- reinsurance in 1989. a short period. Reinsurance is favored by title insurers because it Ms. Walton graduated magna cum /aude from the University of Richmond, in Richmond, VA, with a bachelor of applied studies degree. allows them to minimize their primary liability. Unlike other lines She is a member of the reinsurance commiltee of the American land Title of insurance, reinsurance is handled within the title industry. Other Association. lines utilize outside sources, such as Lloyds of London.

8 Sample Reinsurance Transaction Description of the transaction The reinsurance department has been requested to reinsure an owner's policy insuring Brodkey and Goode Enterprises, a Virginia corporation, in the amount of $105,000,000.00 and a $95,000,000.00 mortgage policy insuring Beasley Bank, N.A. The maximum single title risk is $105,000,000.00. The property is an existing office bulding located in Richmond, Virginia. The lender has requested zoning and usury coverages. The insureds do not have a retention limit on Title Company A nor have they specified any reinsurers. However, the lender's counsel has required that any reinsurance purchased is to be on the ALTA Facultative Reinsurance Agreement (10-21-87) which includes direct access provisions. The risk distribution In the State of Virginia, which is the location of the property and Title Insurance Company A's state of incorporation, the company's 1989 statutory retention limit is $93,000,000. For this transaction, Title Company A's self-imposed retention limit of $35,000,000 is the most restrictive limitation and will therefore govern. Title Company A will retain $5,000,000 as primary liability and $30,000,000 as secondary liability; their total retention is $35,000,000. The balance of the liability is placed with the following companies: Title Insurance Company B-$25,000,000; Title Insurance Company C-$18,500,000; Title Insurance Company D-$18,500,000; and Title Insurance Company E-$8,000,000.

Calculation of reinsurance costs (Rates are for purposes of illustration only; reinsurance rates are set by individual reinsurers and may vary from the levels set forth in the illustration.) Even though the issuing branch only charged the insureds for the zoning coverage, the reinsurers expect to be paid for both the usury and zoning coverages. The reinsurance rate which Title Company A is willing to pay is $0 .50 per thousand dollars of li­ ability assumed by each reinsurer plus an additional $0 .10/$ 1000 for the two extra-hazardous risks, usury and zoning. The reinsurance expense is calculated as follows:

Title Insurance Company B-$25,000,000 X $0.60/$1000 = $15,000.00

Title Insurance Company C-$18,500,000 X $0.60/$1000 = $11 ,100.00

Title Insurance Company D-$18,500,000 X $0.60/$ 1000 = $11, 100.00

Title Insurance Company E- $8,000,000 X $0.60/$1000 = $4,800.00 Total Reinsurance $42,000.00

Payment of a claim There has been a loss sustained of $6,000,000 from a claim filed by the owner. Under the terms of the reinsurance agreement, Title Insurance Company A is solely responsible for the payment of the first $5,000,000, the cedar's primary liability. Based on each company's proportionate share of the total secondary liability, the next $1,000,000 is paid as follows: Share of Amount of Loss Amount of Loss Secondary In Excess of to be paid to Company Loss Risk $5,000,000 Insured Title Insurance Company A .30000 $1 ,000 ,000.00 $300,000.00 Title Insurance Company B .25000 $1 ,000,000.00 $250,000 .00 Title Insurance Company C .18500 $1 ,000,000.00 $185,000.00 Title Insurance Company D .18500 $1,000,000.00 $185,000.00 Title Insurance Company E .08000 $1,000,000.00 $ 80,000.00 $1 ,000 ,000.00 Primary Paid by the Cedar $5,000,000.00 Total Loss Paid $6,000,000.00

9 TITLE INSURANCE COMPANY A

SCHEDULE 1 (to be attached to ALTA Facultative Reinsurance Agreement)

1. The parties hereto are: (a) TITLE INSURANCE COMPANY A, a corporation of the State of Virginia having its principal office in Richmond, Virginia as Ceder, and (b) EACH REINSURER named in 3 (b) herein.

2. Ceder's Policy, identified herein and reinsured hereby, assumes a title insurance risk in the aggregate amount of $105,000,000.00. The land described in the Policy is located in: Richmond, VA . POLICY NO. INSURED TYPE OF POLICY POLICY AMOUNT

XX-XXX-XXXX Brodkey and Owners $105,000,000 Goode Enterprises, a Virginia cooperation 00-000-0000 Beasley Bank, Mortgages $ 95,000,000 N.A.

3. The distribution of the title insurance risk is: PRIMARY LOSS RISK SECONDARY LOSS RISK Amount Share (a) RETAINED BY CEDER $ 5,000,000 and $30,000,000 .30000 (b) CEDED TO, REINSURED WITH , AND ASSUMED BY STATE OF REINSURER INCORPORATION SECONDARY LOSS RISK Amount Share Title Insurance CA 25,000,000 .2500 Company B Los Angeles, CA Title Insurance MO 18,500,000 .1 8500 Company C Chicago, IL Title Insurance CA 18,500,000 .18500 Company D Santa Ana, CA Title Insurance PA 8,000,000 .08000 Company E Philadelphia, PA

4. This schedule 1 is part of and incorporates the provisions of the American Land Title Asso9iate Facultative Reinsurance Agreement (10-21-87).

IN WITNESS WHEREOF, the undersigned each has caused this Agreement to be executed as of the date set forth below:

CEDER REINSURER

TITLE INSURANCE COMPANY A 1234 Main Street Richmond, Virginia 54321

Date of Execution:------Date of Execution:------

Reinsurance File No. ------Reinsurance File No. ______

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by Frederick H. Hemphill, Jr.

hen title people gather after vious. The spirit of cooperation among will implement it and why our competitors hours at regional and national both underwriter and agent members of the should and probably will. W meetings and begin to swap Systems Committee was readily apparent. Information is the lifeblood of our indus­ "war stories," watch their expressions care­ This is particularly true in light of the fact try. Rarely do we see or stand on the prop­ fully. Behind the genuine enjoyment in this that each underwriter representative was erties whose titles we insure; everything we yarn-spinning is often an unspoken, "How absolutely compelled to protect the enor­ know about the property is derived from odd! That's not how it's done in my part of mous investment his company has in exist­ documents, maps, surveys, local customs the country," or "That's different; we call it ing computer software built around data and laws, and the like. Furthermore, when " structures which, if not unique, are still dif­ we attempt to analyze and manage our And the differences are real, for there is ferent in many respects from everyone businesses, we narrow our view of the wide geographic variance in the factors else's. The fact that the committee task property still further. which influence the title to and transfer of group agreed to a standard at all was tanta­ Each of the millions of property transac­ real property. The way in which property is mount to finding an oasis in the desert of tions conducted annually in the title indus­ described, the laws governing ownership, information standardization. For underwrit­ try is reduced to a few meaningful statistics, and the procedures for its transfer are influ­ ers, and for multiple and mechanized which can be equally important to the enced by the history of the region and its agents, th~ Generic Reporting form is truly small , independent businessperson and to antecedent legal system. a major breakthrough. the large national underwriter in determin­ These same differences are often used to The end product of this effort, like the ing their market profile and their profitabil­ support the argument that there cannot be product of most committees, is probably ity by segment. And these statistics, which information standards in the title industry. not perfect for anyone, but is acceptable to become more critical to business decision­ Never mind that many years ago the De­ all. In approval of the form , the indication is making as profit margins narrow, claims in- partment of Housing and Urban Develop­ that the underwriter members of ALTA ment produced the HUD Form 1, which the have concurred that they can accept data The author is senior vice-president­ industry seems to have adapted to nation­ presented in the generic format and adapt it administration and information sys· underwriters to their internal needs. tems of Lawyers Title Insurance Cor· ally. Or, that the national title poration. He is assigned to Lawyers Ti· somehow make sense of differing regional tie 's National Headquarters, in characteristics in running their businesses. Can-Will Richmond, VA. Big deal, you say! Saying that they can do The author joined Lawyers Title in Remarkable! it is not the same as saying they will do it. 1984 as senior vice-president-in· formation systems and was elected to Ignore, too, the latest attempt to estab­ No agent in his right mind will spend the his current position in 1989. Prior to lish an industry automated information first dollar toward modifying his computer joining Lawyers Title, he was vice· standard : the ALTA Agent-to-Underwriter system if there is no underwriter with a president-management information systems for Continental Generic Reporting Form. But wait! That computer system ready to receive the ge­ Financial Services, in Richmond. He previously had served where he attained the form, approved with little fanfare in April , neric report. But consider this: no business­ for 22 years in the US. Marine Corps, rank of colonel. 1989, by the ALTA Board of Governors, man interested in surviving and prospering A graduate of Yale University with a bachelor of engineer­ represents a remarkable achievement. Dur­ should continue to report the same in­ ing degree, Mr. Hemphill received a master of science degree ing the course of its development, through formation in different ways if he can avoid in computer science from the US. Naval Postgraduate School, the Association Land Title Systems Com­ it, and he should naturally and actively seek in Monterey, CA, and is a graduate of the US. Naval War College, in Newport, RI. mittee, the many differences in the informa­ cost-saving procedures. A member of the Land Title Systems Committee of the tion needs of title underwriters were identi­ Will all or most of the ALTA member American Land Title Association (ALTA); the author is also fied and discussed, and the challenges to underwriters use the generic format? 1can­ chairman of the ALTA subcommittee representing the orga· agents in trying to meet those diverse needs not speak for the others, but I can tell you nization 's interests on the Mortgage Bankers Association 's with a single automated system became ob- why Lawyers Title Insurance Corporation Data Standards Task Force.

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Call Toll Free 1-800-637-8979 and ask for Kathy Mercado Title Agents of America (TAM), P.O. Box 218694, Houston, Texas 77218-8694 crease, and expenses continue to rise, are of duplicate keying of information. Of based on the pieces of information the un­ course, there will continue to be errors but derwriters have always required their there should be fewer clerical errors. Most agents and direct operations to produce. discussions between agent and underwriter Electronic Data Some appear on the policy itself (e.g., li­ will focus on more meaningful business is­ Interchange ability amount, policy type, etc.) while oth­ sues (e.g., "Why did you use that rate on ers are derivational (e.g., premium amount, this particular type transaction?"). EDI: No, it's not Star Wars but it is not agent-underwriter commission split, etc.). What is interesting are the additional unrelated, either. EDI stands for Elec­ Some are mandated by various govern­ benefits that accrue to both parties from tronic Data Interchange and is the term mental agencies. All share the common automating the reporting process. In re­ used to describe the exchange of informa­ characteristic of being known at the policy tion between computers using any of a sponding to the need for generic reporting variety of communication techniques, to issuing source because they are based on software, automation vendors are offering include telephone lines and satellite trans­ the particular characteristics of each trans­ the capability to their users of using the mission. action. Therefore, the logical place to as­ statistics for mix-of-business/mix-of-reve­ Technically, there's nothing unusually semble and verify that information is at that nue analysis, just as the underwriters do. challenging about EDI; although there are source. Agreement on a single format has made it many different computer and communi­ feasible for vendors to offer an automated cation technologies, making any specific "Extra" Work? solution to the reporting problem, where group work together for a specific appli­ before, the many different formals made it cation not too difficult. What is more Some agents, however, have viewed the economically unworkable to develop re­ challenging, however, is devising stan­ separate reporting of that information as porting software dards that have broad application. That is "extra" work, partly because they do not . Thus, automation users the real thrust of EDI development. see any direct benefit derived from the re­ can now reduce the labor costs of produc­ The Mortgage Bankers Association of port they are required to prepare. And, ing the reports. America is coming to grips with the prob­ when they write for more than one under­ The underwriter also benefits from the lem of information standards. From the writer, therefore having to report the same reduced keying effort required. It can now initial loan application, through the order­ information in different formats, it does be­ concentrate its resources on the more diffi­ ing of credit reports, appraisals, mortgage come extra work. On the other hand, the cult and important task of verifying the con­ insurance, title insurance, and hazard in­ sistency and accuracy of the information. surance, to the packaging and sale of a underwriters argue that, with thousands of mortgage, there exist many requirements locations producing hundreds of thousands Today's Buzzword-Tomorrow's to transmit the same basic information of policies annually, the only effective and Reality from one business entity to another. The efficient way to gather accurate informa­ MBA created a Data Standards Task tion in summary form is at the source of As we pursue automated information so­ Force to develop an information standard policy issuance. As the underwriters point lutions, perhaps the most interesting and which would support information ex­ out, some information is scattered through­ useful long-range benefit to the parties in­ change for the purposes described above, out the policy, some is in the file but not on volved is the establishment of an electronic as well as being adaptable for future the policy, and some is based on informa­ link. Electronic Data Interchange (EDI) applications. tion in the agent's may be perceived as just the latest buzz­ The Data Standards Task Force has contract or even negoti­ ated for a particular transaction. Only the word today, but in fact it is tomorrow's real­ wisely followed the lead of other indus­ ity. The Mortgage Bankers Association of tries in adopting the person with the complete file and full American National America is fully immersed in the develop­ Standards Institute's (ANSI) X.12 Data In­ knowledge of the transaction can produce ment of terchange Standards. X.12 provides a set the report. data standards for information ex­ of rules for formulating and exchanging change and they hope that their business trading partners, including the title insur­ information. Furthermore, since it is a Win-Win standard in the public domain, it offers ance industry, will embrace the electronic the advantage of having numerous fields The ALTA Agent-to-Underwriter Generic exchange of information. ALTA is partici­ of commonly-used information already Reporting Form provides a win-win solu­ pating in this joint effort. What we learn defined and in use by other industries. tion. The agent can now use his automated from our initial excursion into the field will The ALTA has representation on the equipment to produce required reports for prepare us not only to meet and accept that MBA Data Standards Task Force. A sub­ all his underwriters with little effort-once particular challenge, but, more importantly, committee of the Land Title Systems he has made the one-time modification to to develop and apply new uses for informa­ Committee was formed to work with the his program. His system will now format MBA in defining a generic title insurance tion to achieve greater accuracy, greater order form for information exchange be­ the information already in the case file in speed, reduced costs, and greater profit­ tween the two industries. The goal of this the generic format. In other words, produc­ ability. Other industries are already com­ subcommittee is to develop such a ge­ ing those reports really does become inci­ mitted to EDI; the impact on our industry neric order form for approval by the dental to doing the "real" work of develop­ will arrive sooner than we think. ALTA Board of Governors so that the title ing and producing the title insurance insurance industry's interests are repre­ policy. And, the underwriter now gets the It's Up To You sented in our dealings with our mortgage information he needs-keyed, verified, and Will the ALTA Agent-to-Underwriter Ge­ banking industry partners. corrected at the source, ready for direct neric Reporting Form be accepted quickly? entry in electronic form in his or her com­ No. Will it be accepted universally? No. puter. Automating this process gives both How about inevitably? Yes. So the choice is participants the benefits of increased speed to lead, follow, or get out of the way. We and accuracy and the reduced labor costs choose to lead. What is your choice?

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= ing open a package of fresh tapes. The ma­ chine was tested no less than a dozen times to ensure its working capability. Everything was in order. The interview went smoothly. During the General Session I decided to listen to the interview. I played the tape and heard noth­ ing. Thinking I had fast forwarded the tape, The Makings I started to rewind it. The only "audible" sound was a voice akin to that of the Excorcist. What to do? Ken Abbinante, the convention photographer and my calming of an force, sat down with me, trying to recall the answers to Bradley's questions. In a brief moment of lucidity, it occurred that the interview could be reshot en route Interview to the airport with the use of a borrowed recorder-providing of course, Bradley agreed. He wasn't thrilled about the "dou­ by Adina Conn ble interview," but he was indeed a good sport. There we sat, cabbing it to the SeaTac Airport. The noise from "cab control" made us feel part of Adam Twelve. The interview was more candid and relaxing any times at conventions, I'm than the prior one. Oddly enough, it was stopped by members interested also more personal. And despite all, he still Min chatting about the interviews offered to pay for the cab-a sign of a real A sense of humor is appearing in Title News. There are several professional and a true gentleman. '' questions which are most frequently asked. helpful in all situations The first centers around the nature and The effect of hotel housekeeping on -and an absolute personality of the individual interviewed; the media ... necessity for the worst case example-" ls David Brinkley as intimidat­ My interviews during the Toronto Con­ ing as he seems on TV?", of " ls Mark vention were scheduled with foreign cor­ scenarios. Shields as funny during an interview as he is respondent Pierre Salinger, and Washing­ when addressing an audience?" "How did ton Week in Review's Paul Duke. you come up with your list of questions?", The night before the Salinger interview, I is yet another point of interest to readers. had returned to my room, to find my pile of '' A good interviewer never gives away papers, background information, and ques­ trade secrets. There are, however, certain tions missing. Housekeeping had gone behind-the-scenes accounts-all of which above and beyond the call of duty. In fact, go into the "makings of an interview." Keep they cleaned me right out of my notes and in mind, that a sense of humor is helpful in research. And-Salinger had just called to all situations-and an absolute necessity ask if I wanted to do the interview that eve­ for the worst case scenarios. ning. Luckily, I was able to call someone who On the importance of keeping one's had a draft of the questions. composure when all else fails­ The moral of the story? Cleanliness is not especially the tape recorder . .. always next to godliness! One of my first interviews for the Associ­ ation was with 60 Minutes Co-Editor Ed On the importance of research ... Bradley. I was ecstatic to have secured an By far, one of the most challenging inter­ interview with Bradley. Months were spent views was with Newsweek columnist Jane in preparation- I even called a friend of Bryant Quinn. Even her husband says she's mine who worked with Bradley in Vietnam. a tough nut to crack. I had felt there was The day of the interview came. I was in­ more to this person than a hard-working structed to phone Bradley at exactly 7: 15 business woman. am . He was addressing the General Session While researching one day, I happened at 9:30, and would leave for the airport im­ upon a little piece of trivia-Quinn happens mediately following. to be a great admirer of South American art Prior to the interview, my compulsive na­ and culture. I had minored in Andean civi­ ture had me checking the tape recorder lization. A perfect combination. She was dropping in brand new batteries and tear- mad about the Mayans, and I was crazy

17 about the Incans-a healthy swapping of Brinkley's gracious nature and his willing­ chair. My phone call was interrupted by a information. And so it was, at that particular ness to grant us extra time. sonic blast-the infamous October 17, moment during the interview, the tough ex­ 1989, 5:04 pm earthquake. My notes on Ad­ terior came down, and a different person "Gone with the Wind" (or, I left my miral Turner were quite literally gone with emerged. It was a memorable moment and notes in San Francisco) ... the wind-the interview, seized by the 7.1 certainly a turning point in the interview. San Francisco, October 1989. I was thor­ on the Richter Scale. Papers to ashes, notes oughly looking forward to interviewing our to dust, the long-awaited interview was "The Mata Hari Escapade" (or, on Convention speakers, former CIA Director nothing short of a bust. being in the right place at the wrong Admiral Stansfield Turner, and Washington time) ... political journalist Hodding Carter. After re­ An epilogue . .. Mid-Year Convention in Washington turning from a wonderful lunch with a All of the above vignettes only reinforce 1989-ABC Host David Brinkley was slot­ friend and fellow Association member, I the fact that the best-laid plans often go ted for an interview. This convention was in headed upstairs to complete research for astray. These are indeed the times that try a Washington's majestic Mayflower Hotel the next morning's interview with Admiral journalist's soul. The interview gremlins, Turner. It was a lovely day, and I decided to overzealous chambermaids, secret service, work outdoors on the terrace. or natural disasters will always ensure that I took a break to place a phone call. My the certainty in any situation is the un­ interview notes were left on the terrace predictability of events. '' The certainty in any situation is the unpredictability of events. ''

(located directly across the street from ABC). Little did we know we would be sharing our meeting space with Israeli Prime Minister Yitzhak Shamir. The May­ flower proved to be a strategic location for Shamir, who had just finished an interview at ABC. Several hours before his press con­ ference, hundreds of members of the press corps were lined up in the hotel lobby to pass through security. The scene resembled a maximum security clearance at a major international airport. Fifteen minutes before my scheduled in­ terview with Brinkley, Ken and I left the building to cross to ABC. Once outside, we noticed blockades, armed policemen and secret service, who eagerly "escorted" us (and I use the term kindly) back to the hotel. I informed them of our meeting with Brinkley. They just laughed. I explained to them that I was not Mata Hari, but rather, an innocent journalist just trying to do her job. They were not to be deterred-but neither were we. We went out another door, "casu­ ally" headed in the direction of ABC, where I was quite literally picked up by another secret service man, and taken back into the hotel. I was furious at Shamir for cutting into my interview time. Just as we got clear­ ance into ABC, the blockades were lifted. I entered the interview feeling positively mis­ erable and agitated. Because everything happened so quickly, I remember very little of the actual interview-but I do remember

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ORANGE COUNTY PHOENIX SEATTLE SAN DIEGO PORTLAND (Administration) 11225 N. 28th Drive 35717 Pacific Highway South 4275 Executive Square #800 123 NE Third St., Ste. 503 7411 Lorge Circle Suite D-107 Federal Way, WA 98003 La Jolla, CA 92037 Portland, OR 97232 Huntington Beach, CA 92647 Phoenix, AZ. 85029 (206) 952-3604 (619) 546-2877 (503) 234-8816 (714) 842-9111 (602) 866-0909 SAN JOSE SACRAMENTO COSTA MESA 2021 N. Capitol Ave. "B" 9718 Fair Oaks Blvd . "A" (Computer Center) San Jose, CA 95132 Fair Oaks, CA 95628 3160 Airway Avenue (408) 946-5610 (916) 961 -4633 Costa Mesa, CA 92626 (714) 549-5700 TIPAC Kicks Off ''Campaign 1990''

by Robin K. Santangelo TIPAC Executive Secretary

rom as far away as Alaska and as state legislative battles over this issue. The close as Maryland, nearly 30 Board congressmen received intense lobbying by F and State Trustees of the Title In­ title insurance executives about these and dustry Political Action Committee (TIPAC) other industry concerns. The Committee is recently met in Washington, DC, for one of expected sometime during the second ses­ the most successful political gatherings in sion of the 10 I st Congress to consider a the history of the title insurance industry. banking bill that will address the entry of Led by TIPAC Chairman Bert Massey, The banks into the insurance industry. Brown County Abstract Company, the Congressman Dreier joined the Trustees Trustees began their session with private after a personal meeting with President receptions and dinners with Members of George Bush at which the President in­ Congress on the important House Banking formed Mr. Dreier that he would incorpo­ Committee, which has jurisdiction over rate some of his initiatives in the State of the banking and insurance legislation. Union address the following day. Congress­ In three separate locations at the Wash­ man Dreier was delighted-his excitement ington Court Hotel on Capitol Hill, TIPAC was evident to the Trustees at his dinner. Trustees hosted events with Represen­ Dreier was also interested in the conflict of tatives Frank Annunzio (D-IL), David Dreier interest problems when a bank would in­ Congressman Frank Annunzio (R-CA), and Bruce Vento (D-MN). By all sure the titles on its own mortgage loans. (D-IL) (left), chairman of the accounts, these events were the highlight of Some of the dinner discussion also focused Subcommittee on Financial the session. Much of the time spent during on the Congressman's recently completed Institutions Supervision, the dinners focused on why banks should excursion to the Berlin Wall and other loca­ Regulation and Insurance, voices not expand into the title insurance busi­ tions in Eastern Europe. About the wall he his support for efforts to restrict , "In fact there were so many peo­ banking expansion into the title ness-a crucial subject in light of ALTA's reported insurance industry with TIPAC two lawsuits against the Comptroller of the ple at the Wall that it became apparent that Chairman Bert Massey. Currency and the Association's continued the hammer and sickle had been traded for the hammer and chisel!" At another dinner with Congressman An­ nunzio and his assistant Curt Prins, staff di­ rector of the Financial Institutions Supervi­ sion , Regulation and Insurance Subcommittee of the House Banking Com­ mittee, TIPAC learned of hearings planned in the near future that will discuss a bill to allow affiliation of banks with all types of financial and nonfinancial companies. It would also allow banks to own companies that engage in the securities, real estate and insurance industries. TIPAC expects to be an especially active supporter of Congress­ man Annunzio in the upcoming election due to his support of ALTA 's position on the restriction of banks entering the title insurance business. The third dinner with Congressman

20 Vento also featured a discussion of banking issues before Congress. Mr. Vento chairs a Subcommittee Task Force charged with monitoring the Resolution Trust Corpora­ tion, which replaced the Federal Savings and Loan Insurance Corporation under the thrift industry legislation passed last year. The congressman expressed his concerns about the failure of the RTC to formulate and execute policies to assist the thrift in­ dustry bailout. A senior member of the Banking Committee, his views on banking and insurance issues are of vital importance to ALTA. The Association appreciates his continuing support for the title insurance industry's position on these issues. The Trustees began the next day with a breakfast briefing from James Shanahan, partner at Price Waterhouse, consultants to ALTA. As the President had just submitted his fiscal 1991 budget proposals to Con­ 3 gress on January 29, two days before the breakfast, Trustees were treated to a Wash­ ington "insider's" discussion of the bud­ get's impact and chances for survival in a Congress with a Democratic majority. The proposed capital gains exclusion was of particular interest to the Trustees. Political analyst Charlie Cook next pre­ sented a state-by-state breakdown of the year's most wakhed elections-informa­ tion that will be considered as TIPAC looks at where to best invest title industry con­ tributions in 1990. And, TIPAC consultant Bob Boege's nuts-and-bolts " fundraising fundamentals" session covered the role of the State Trustee, and the many ways to encourage participation in TIPAC through direct mail solicitations and at state con­ 4 ventions. For the first time, the "training" session was audio taped and sent to all Trustees, along with a detailed syllabus of the presentation. Much appreciation for the success of the Washington meeting goes to Chairman 1. Oklahoma State Trustee and Former ALTA Massey and the TIPAC Board of Trustees: President John Cathey (from left) shares a light moment with Congressman Bruce Vento Charles Foster, Jr., Lawyers Title Insurance (D-MN) and Board Trustee C. J. Mcconville. Corporation; Joseph Gottwald, California Counties Title Company; D.P. Kennedy, 2. Congressman David Dreier (R-CA) (right) reflects First American Titk Insurance Company; on the House Banking Committee's legislative agenda Gerald Lawhun, Western Title Company, with Board Trustee Don Kennedy. Inc.; C.J. McConville, Title Insurance Com­ pany of Minnesota; Richard Pollay, Chi­ 3. New TIPAC Board Trustee and ALTA Government cago Title Insurance Company; and, Her­ Affairs Committee Chairman Jerry Lawhun (right) with bert Wender, Commonwealth Land Title Price Waterhouse Partner Jim Shanahan. Insurance Company. For more information 4. Board Trustee Richard Pollay (from left) with on "Campaign 1990," or for a free copy of Curtis Prins, staff director on the House Banking the TIPAC information brochure, contact Committee's Financial Institutions Subcommittee, Legislative Assistant Sherri-Lynn Minor, New Board Trustee Charlie Foster and New Illinois Suite 705, 1828 L Street, N.W., Washington, State Trustee Jim Weston, before dinner with Illinois DC 20036; 202/296-3671. Congressman Annunzio.

21 NAMES IN THE NEWS

Chicago Title Insur- Rosencranz, appointed Continental Title Insur- ance Company an- title officer, Chicago; Cur- ance Company, Had- nounces the following tlss Ross, appointed resi- donfield, NJ, an affiliate of elections: James D. dent vice president and IVT. Aprile, Indiana area remains regional account- Martha B. Barrera manager for Chicago Ti- ing officer, Cleveland; has been appointed senior tie in Indianapolis, has Paul T. Sands Jr. , ap- vice presiden t, responsi- been elected vice presi- pointed Ohio state man- ble for all phases of per- Kantosky dent of the company, an- Sands ager and remains vice Ba"era sonnel administration at nounced Richard L. president, Cleveland; Ste- Ticor Title, including hu- Pollay, Chicago Title ven E. Stark, appointed man resource policies, president; William H. assistant vice president, employee benefits, com- Kantosky, Southwest Cleveland; Jacob munications, employee Ohio area manager for Yonkman, appointed res- relations and practices, Chicago Title in Dayton, ident vice president and records and national re- has been elected vice remains branch manager, cruitment. president of the company. Crown Point, IN. Commonwealth Land Chicago Title and The Board of Directors Title Insurance Com- Trust Company is of Title Insurance Com- Baily pany announces the fol- pleased to announce the pany of Minnesota lowing appointments: following promotions: (Minnesota Title) has Clara Louise Baily, pro- Clark Neil A. Clark, appointed announced the promotion moted to assistant vice resident vice president Jones of Cheryl A. Jones to president, Colorado and C&I executive, Man- vice president of person- Springs, CO; Richard hattan, NY; Stuart nel, Minneapolis, MN; Christensen has joined Finkle, appointed re- Martin R. Haller, asso- Commonwealth as gional claims manager, ciate title counsel for county manager in the Pacific Northwest Region, Minnesota Title has company's new Fresno, and manager, Claims Sal- been elected to the addi- California branch; Cath- vage Administration, and tional office of assistant erine J. Coca has been remains associate general vice president, Boston, promoted to assistant vice counsel, Chicago, IL; Ed- MA; Edward D. Lee has president, Colorado ward D. Hayman, resi- been named New Mexico Springs; Stephen M. dent vice president and state manager, Albuquer- Conroy has been pro- remains Cleveland ti tle que; Tari M. Pekar- moted to vice president, operations manager, Willits, vice president, based in the company's Cleveland, OH; Dennis has been named central Philadelphia headquar- Hines, appointed resi- division manager, Cleve- ters; PA; Richard D. dent vice president and land, OH; Sue Reddy has Conroy Grab has been promoted remains Kentucky/West been elected to the posi- to assistant vice president, Virginia area manager, tion of assistant vice presi- based in the company's Louisville, KY; Julia J. dent and Indiana/Ken- St. Louis, MO office; Earl Kirby, appointed area tucky State manager; Holzer has been pro- manager, Upstate New Charles Solms, III, a moted to assistant vice York, and remains resi- partner in the law fi rm of president, Pittsburgh, PA; Mancz dent vice president, White Eaton, Solms, Mills and Joseph W. Huber has Plains; Janett B. Lowes, Mcininch in Manchester, been promoted to assis- resident vice president New Hampshire, has been tant vice president, based and remains county oper- O 'Driscoll retained as counsel by Huber in the company's Alie- ations manager, Indianap- Minnesota Title; Har- gheny County office, Pitts- olis, IN; Brian Mancz, vey W. Webster, Jr., burgh; Monica Jacovelli appointed resident vice has been named Florida has been promoted to as- president and remains agency manager, Tampa. sistant title officer, based branch manager, Cincin- John J. O'Driscoll in the company's Patter- nati, OH; William E. was promoted to vice son, NJ office; Charles J. Meade, appointed resi- chairman of Industrial Keffer Jr. has been pro- dent vice president, Ak- Valley Title Insurance moted to vice president. ron, OH; Greg Pool, ap- Company (IVT), Phila- Keffer, who is also the delphia, PA. Previously a Pittsburgh, Pennsylvania pointed regional claims Keffer manager, Gulf Central Re- senior vice president of branch manager, is re- gion, and remains asso- IVT, he was also ap- sponsible for all co mpany ciate general counsel, pointed to the Board of operations in Allegheny Chicago; Linda H.

22 at else is there?

When it comes to software for your business, And ready to customize, because Lanzar under­ not much else. ZAR/flex, Lanzar's fully integrated stands that your way of doing business is there for real estate closing and title insurance application, a reason. We don't change your office to suit our is designed from the ground up to give you unbeat­ system-our system suits your office. able flexibility, power and speed. With more than Find out what else there is. 100 installations throughout the U.S., ZAR/flex is a Call for free information. 1-503-636-8515. stable, time-tested product that comes ready to use. Real Estate Closing System Escrow & Title Order Tracking Escrow Trust Accounting Management Reporting General Accounting Starter Tracking Title Policy & Document Preparation Title Plant Indexing

Li\/\VZAR soffwaresystems ZAR!pds and ZAR/flex are trademarks of Lanzar Software Systems • A Division of International Consulting and Soffware, Inc. • 4500 SW Kruse Way, Suite 360 • Lake Oswego, OR 9 7035 County. Michael B. been promoted to re- Orange County office of Mellion has joined Com- gional counsel in New World Title Company. monwealth as Rhode Is- England for First Amer!- Matranga, a founder and land State counsel. Based can Title Insurance corporate vice president in the company's Provi- Company. Lebovltz has of the company, was dence office, Mellion is been Connecticut state named Orange County responsible for claims ad- counsel for almost four sales manager and will ministration and under- years. He now has the oversee all sales activities Me/lion writing activities for Taylor added responsibility for Chittick at WTC headquarter's. agency and direct opera- Rhode Island. Rowan H. Chittick was promoted to tions throughout the state; Taylor Jr. has been ap- a corporate vice president Lawrence W. Pew has pointed vice president- of the company and will been promoted to assis- state manager in Missis- continue as a sales execu- tant vice president, based sippi for First American. tive in Orange County. in the company's Colo- Lawyers Title Insur- Fidelity National Tl- rado Springs office. Pew ance Corporation an- tie Insurance Company is responsible for the Col- nounces that its wholly has named William M. orado Springs title plant owned subsidiary, Law- Broffman of Newport Pew and production. He also Steele yers Title Agency, Inc., Broffman Beach to the position of serves as assistant branch has been made a branch vice president, human re- manager. of the company. Mark A. lations and risk manage- In conjunction with the Steele has been ap- ment, Irvine, CA; Barbara recent increase in com- pointed branch manager, Ferguson has been pro- pany ownership by local Fredericksburg, VA. mated to vice president, management, Landmark Lawyers Title Insur- banking administration Title, Inc. has elected ance Corporation an- for the company, Irvine. four new Board of Direc- nounces the appointment Judi S. Gonshak has tors. Landmark Presi- of Philip M. Champagne joined Fidelity National dent and Chief Executive as commercial transac- Title Agency of Champagne Ferguson Officer Michael Massey, lion counsel in the com- Maricopa County in the attorney Michael Ryan pany's Rhode Island state escrow department of its and Robert Anderson, office, Providence; Frank North Scottsdale office, vice president, Stewart Ti- T. McCormick as Vir- Phoenix, AZ. Joy tie Guaranty Company, ginia state manager, as- Vanderlult and Linda have been joined on the signed to the company's Barkus have been given company's Board of Di- Virginia state office, Rich- expanded responsibilities rectors by Roger mond; W.E. Mullens has at Fidelity's North Archambault, vice presi- been appointed manager Scottsdale office. Both dent, Fleet Bank; Peter of the company's branch Vanderlult and Barkus VanBuskirk Rotch, partner, McLane, in Atlanta, GA; Lisa K. have been with Fidelity Graf, Raulerson and Mid- Tully has been appointed since June of 1988. dleton; Scott Suther- title attorney in the com- Virginia M. Cross has land, president, Colonial pany's branch office in been named vice presi- Capital Corporation; and Richmond, VA; Debra J. dent, southwest region , Rand Zimmerman, vice VanBusldrk has been by Attorneys' Title In- president, First New appointed regional quality surance Fund, Inc. She Hampshire Exeter Banking control coordinator. She will oversee the compa- Company. transferred from the com- ny's regional title informa- American Realty Tl· pany's Richmond, Virginia tion and title insurance tie Assurance Company Walker branch to its national operations for 15 Florida (ARTA) is pleased to an- headquarters, also in counties. Charles Gar- nounce the promotion of Richmond, to assume her ner has been named William S. Evans to vice new position. J. Robert manager of Attorneys' president, agency division, Walker has been ap- Title Volusia County Columbus, OH. Evans pointed vice-president- branch office. As branch will assume the overall marketing operations, as- manager, Garner will be management of the signed to national responsible for directing agency division, which in- headquarters. the operation of the eludes eight states and Larry Joe Matranga Volusia County Branch. over 5.3 million dollars in Matranga and Al Chittick have sales. been appointed to top ex- Gilbert Lebovltz has ecutive positions in the

24 NEW ALTA MEMBERS

Erie-Niagara Agency, Inc., Buffalo, (Robert Wisconsin (The names listed in parentheses D. Dacey, Lawyers Title Ins. Corp., White Richland County Abstract & Title, Inc., are recruiters who have now qual­ Plains, NY) Richland Center ified for membership in the ALTA Maier Abstract Corp., Fleischmanns, (Har­ President's Club.) old Schwarz, First American Title Ins. Co., Garden City, NY) ASSOCIATE ACTIVE New Mexico Landmark Title, Inc., Clovis, (Dave Lanier, California New Mexico Land Title Association, Al­ Jamin Hawks, San Francisco Oack A. Ma­ Alabama rino, Jr., Ticor Title Titlechek, buquerque, NM) Ins., New York, NY) Inc., Birmingham, (Paul Dickard, Ted C. Radosevich, San Francisco Jr., Transamerica (Susan Title Ins. Agency, The Oregon Ried, Esq. Landels, Ripley & Diamond, Woodlands, TX) Fidelity National Title Co. of Oregon, Port­ San Francisco, CA) land California Iowa Southern California Title Company, Encino, Tennessee Johannah K. Kline, West Des Moines (Sid­ (Louis Balocca, Continental Land Title First Cumberland Title Co., Crossville, ney Ramey, Peoples Abstract Co., Co., Des Van Nuys, CA) (Robert Croley, Tennessee Valley Title Moines, IA) District of Columbia Ins. Co., Knoxville, TN) Attorneys Title Corp., (Paul Dickard, Jr., Texas Transamerica Title Ins. Agency, The Kerrville Title Co., Kerrville, (Richard P. Woodlands, TX) Toft, Chicago Title Ins. Co., Chicago, IL) Florida Utah Acadian Research, Inc., Riverview Coalition Title Agency, Inc., Park City First Title & Abstract of the Florida Keys, Virginia Inc., Key West, 0. Herman Dance, Guardian Title Company, Fairfax, Oohn Wa­ Goldcoast Title Company, Boca Raton, ters, Commonwealth Land Title Insur­ FL) ance, Fairfax, VA) Girard Title Co., Homestead (William Real Estate Information Service, Herndon Randol, National Title Ins. Co., Miami, FL) Okee-Tantie Title Co., Inc., Okeechobee (Bobby L. Anderson, T.A. Title Ins. Co., Palm Harbour, FL) Terra Title Company, Miami (Paul Dickard, ( WHAT ARE WE WORTH? ) Jr., Transamerica Title Inc. Agency, The I don't really have a good idea. Woodlands, TX) Let's ask the accountant. Illinois What Near North does the accountant know National Title Corporation, Chi­ about the value of our company? He's been working with cago, Oames Costello, First American Ti­ our numbers for years. tle Ins. Co., Chicago, IL) The value of our company comes Maryland from more than just the numbers' Marantha Title Services, Inc., Crofton Massachusettes Whoever values our Company has to know about market demographics, Carole A. Moore, Waquoit the title insurance industry and how it works. They have to know how to value a title plant; factor in what our competitors are doing. and all the Michigan other things that are important to our industry. Our accountant doesn't Muskegon Metropolitan Title Co., Muske­ get involved in that .. . We should use a professional business appraiser. gon, (Mary Isham, Michigan Land Title Association, Lansing, Ml) Who should The Land Company of America, Gaylord, we ca11 ·> (Mary Isham, Michigan Land Title Associ­ American ation, Lansing, Ml) Land Pennsylvania Title Assoc. Land Title Assoc . Minnesota Lawrence E. Kirwin, Titleworks, Inc., Arden Hills, (Michael Esq., President J. Accredited Senior Appraiser• Fonder, Commonwealth Land Title Ins. American Society Of Appraisers Co., Minneapolis, MN) 996 Old Eagle School Road, Suite 1112 Wayne, PA 19087 New York 215-688-1540 All County Land Services, Inc., Williamsville, (Thomas F. Clark, Stewart Title Ins. Co., Syracuse, NY) Capital Abstract & Title Agency, Inc., Syra­ cuse, (Michael D. Doty, Pentagon Ab­ stract & Title Agency Co., Ltd., Syracuse, NY) REINSURANCE policies which insure interests in the same property. A $20 million continued from page 8 first lien mortgagee policy issued in 198 7 and a $20 million second lien mortgage policy issued today will have an aggregate liability the nature of the risk and the aggregate amount of liability. For of $40 million. example, if the property is located in an area where the risk of a claim by an Indian tribe is high, then the amount of liability which Special coverages will be retained will be less than the "normal" retention. If the Certain coverages under the underlying title insurance policy, transaction has an aggregate liability of $400 million, then the such as endorsements for shared appreciation, interest rate swaps, ceder is likely to retain more liability than "normal " because its and variable mortgage interest rates with negative amortization, overall share of any loss is not as great as when the entire liability increase the liability above the amount listed in Schedule A of the is retained on a $20 million transaction. policy by a specified amount. These additional amounts are in­ For each transaction the reinsurance department must review cluded in the maximum single risk total. For example, a loan the laws of the state where the insured property is located, the policy in the amount of $20 million which has a shared apprecia­ laws of its state of incorporation, and the customer's imposed tion endorsement with an additional amount of insurance of $1.5 retention limit to determine how much liability the ceder will million has a total single risk of $21.5 million. retain and how much reinsurance to purchase. Extra-hazardous risks which usually require additional reinsur­ ance fees include endorsements for revolving credit, a change in Aggregate liability partnership (Fairway), usury, zoning, non-imputation of knowl­ Determining the maximum aggregate single risk is often diffi­ edge, navigational servitude assignments of beneficial interests, cult. Situations which could cause a multiple site transaction to be and doing business. In addition, the cost of reinsurance varies considered a single risk for the purpose of calculating the maxi­ based on the title companies used as reinsurers. One company has mum liability include a single credit agreement, a blanket loan begun to require additional payment for option coverage included document, cross-collateralizing properties, a leveraged buyout, an in a loan policy, and there is no consistency in the computation of interest rate-swap agreement, multiple parcels with a common the cost for the 150 percent commercial inflation coverage. chain of title, non-imputation of knowledge coverage and/or a tie­ of obtaining reinsurance in (also known as cluster or spreader) endorsement. Mechanics Multiple policies issued for a single site should be reviewed to The fax machine has really benefited title insurance reinsurance determine the ceder's aggregate liability. For example, a fee own­ operations. For example, before the advent of the fax, a ceding er's policy for $20 million and a leasehold mortgagee policy in the company in a megabuck deal would have to telephone over 25 amount of $20 million have an aggregate liability of $40 million compan ies to tell them the terms of the deal in a timely fashion. because there is no non-cumulative provision between fee and This could sometimes take days. With the fax machine, the terms leasehold policies as there is between owner's and mortgagee of a deal can be distributed automatically in a fraction of the time.

OF NEW MEXICO WHO WAS THE lST TO:

•Build a state approved 20 year computer title plant in New Mexico? •Release a scrolling HUD settlement statement? (Llncol11 County, 1979) (Collin County, 1983) ·Build an on-line sovereignty computer plant in Texas? •Automatically index plant records in over 100 ways? (Brazos County, 1983) (Brazos County, 1983) •Convert a TRW computer/lische plant to run on a Novell LJ\N? (1,300,000 records of Santa Fe County, 1985) ANSWER: Spencer Systems of New Mexico!

If you want to stay 1st in the eyes of your customers and reduce your biggest monthly expense, call for your demonstration video today. Send your check for $25.00 to: Spencer Systems of New Mexico Alto, NM 505-3.36-4018 More and more frequently, ceders are faxing a uniform reinsur­ ance offer that has been developed and is being refined by the ALTA Reinsurance Committee. 5:04 PM Oct. 17, 1989 It cannot be emphasized enough that the amounts of liability retained and ceded, as well as underwriting issues, need to be disclosed to prospective reinsurers well before the closing. Too Special edition ALTA earthquake T-shirts often important issues which have been the subject of numerous from the Association's Annual Convention discussions and negotiations between the ceder's underwriting in San Francisco are now on sale for $5.00 staff and the customer are not relayed to the ceder's reinsurance department and then to the reinsurers until the "money is on the each. wire." When that happens, valuable time may be lost if a reinsurer objects to any coverage or other aspect of the transaction. Perfect for that special gift for a friend, rela­ In practice, reinsurance departments either are alerted to trans­ actions requiring reinsurance by agents or branch offices prior to tive, or co-worker from your adventures in the issuance of the basic title insurance policy or by the depart­ San Francisco. ment's review of title orders. In some instances, reinsurance is purchased after the issuance of the underlying policy. However, the goal for a ceder is to purchase reinsurance as close in time as To preserve your memories now, call or possible to the sale of a policy so that the cost of the reinsurance write: can be netted against the premium income from the sale of the policy. Without such matching, there could be distortions in agency or branch income. However, in large sophisticated trans­ ALTA actions, the customers, the lenders involved, require the reinsur­ 1828 L Street, NW ance agreements, or at least marked-up binders, to be on the table at closing. Suite 705 The evolution of reinsurance Washington, DC 20036 As we head toward the twenty-first century, we might see (202) 296-3571 changes in title reinsurance. A very few transactions have used the quaternary level of reinsurance as the size of transactions contin­ ues to escalate; some companies are exploring reinsurance out­ Quantity orders available at discount side the title industry as another source of capacity. What will continue to remain constant is the important role that reinsurance price. Ask for details. plays in the title business.

Forms Handbooks

ALTA Title Insurance Policy Handbook. Containing all current title insurance policy forms adopted by ALTA, including new forms now in effect. This extremely useful Handbook contains the full course discussion papers prepared by the faculty for use at the ALTA seminars, "UNDERSTANDING THE NEW ALTA TITLE INSUR­ ANCE POLICY FORMS." The Handbook is in a 3-ring binder format which will permit periodic updating. This updating service will be included in the purchase price for ALTA members only. Non-members will pay $7.50 for future updates.

ALTA Members $28.00 Non-members $35.00 Orders of 11 or more $25.00 (each)

SEND ORDERS TO POLJCYFORMSHANDBOOK American Land Title Association 1828 L Street, N.W. Suite 705 Washington, D.C. 20036

Please make check payable to The American Land Title Association.

27 August 15-18 Indiana, Omni-Severin Hotel, 1990 AFFILIATED Indianapolis, IN ASSOCIATION 2-4 Idaho, Templins Resort, Post Falls, ID 16-19 New York, The Sagamore on Lake CONVENTIONS 9-12 North Caroli na, Great Smokies Hilton, George, Bolton Landing, NY Asheville, NC 23-26 Washington, The Inn at SEMI-AH-MOO, April 16-18 Montana, Copper King Inn, Butte, MT Blaine, WA 19-21 Arkansas, Holiday Inn & Convention 17-19 Kansas, Holidome, Salina, KS 26-28 Nebraska, Ramada Inn, Kearney, NE Center, West Memphis, AR 23-25 Minnesota, Radisson Hotel, Duluth, MN Mid-late September Nevada, (date and site 19-21 Oklahoma, Marriott Hotel, Oklahoma has not been chosen), Mesquite, NV City, OK September May 6-8 Dixie, Westin Canal Place, New Orleans, November 3-6 Texas, Wyndham Hotel, Corpus Christi, TX LA 1-3 Arizona, (has not been chosen), , AZ 6-8 Iowa, Gateway Convention Center, Ames, 6-9 Missouri, Adams Mark Hotel, St. Louis, MO Scottsdale IA Florida, Buena Vista Palace, Orlando, 9-11 Ohio, New Market Hilton Hotel, Canton, 14-17 11-13 Virginia, Kings Mill on the James, OH FL Williamsburg, VA 13-14 Wisconsin, Paper Valley Hotel , 16-19 California, Hyatt Regency, Monterey, CA Appleton, WI December 17-19 New Mexico, Hilton Inn, Las Cruces, 13-15 North Dakota, Comfort Inn & Elks NM Lodge, Wahpeton, ND 7 Louisiana, Meridian Hotel, New Orleans, LA

18-20 Palmetto, Kiawah Inn, Kiawah Island, 14-16 Maryland, Sheraton, Ocean City, MD District of Columbia-not yet scheduled SC

June 3-5 New Jersey, Marriott's Seaview Country Club Resort, Absecon, NJ AN EVENT FOR 7-8 South Dakota, Golden Hills Resort & EXPERIENCED TITLE PROFESSIONALS Convention Center, Lead, SD

7-9 Tennessee, Omni Hotel, Memphis, TN WHAT: Educational Course-Advanced 10-12 Pennsylvania, Sheraton Lancaster Golf Reso rt, Lancaster, PA Issues in Title Insurance Underwriting 14-17 New England, Samoset Resort, Sponsored by American Land Title Associ­ Rockport, ME ation/Maryland Land Title Association 15 Alaska, (has not been chosen), Anchorage AK

21-23 Colorado, Village of Breckenridge, WHEN: Thursday afternoon and Friday Breckenridge, CO morning, May 3 and 4, 1990 21-23 Oregon, The Riverhouse, Bend, OR 21-24 lllinois, Adams Mark Hotel, St. Louis, WHERE: Baltimore Marriott Inner Harbor MO Hotel, Baltimore, Maryland July 12-14 Utah, Homestead, Midway, UT MORE INFORMATION? Call or write Patri­ 18-20 Michigan, Grand Hotel, Mackinac cia L. Berman, ALTA, 1828 L Street, N.W., Island, Ml Suite 705, Washington, D.C. 20036, (202- 19-21 Wyoming, (has not been chosen), Evanston, WY 296-3671)

28 A TITLEPROFILE Company: The Sentinel Title Corporation Location: Columbia. Maryland Branch Jeffrey M . Dreifuss, Executive Vice President Executive: Jeffrey M . Dreifuss Rosemar y G. Hall Education: J.D .. University of Baltimore Settlement Coordinator Favorites: Linda 0. Cr awford Author: J.D. Salinger Chief Pr ocessor Sport: Skiing and Golf Vacation: Any ski resort in Colorado Family: Wife. Susan. and children. Joshua. Daniel. and Sarah Hobby: Camping Computer System: TITLEPRO 5

Jeffrey Drelfuss: "Ours is a competitive market. Titlepro has made our product noticeably superior." TITLEPRO. The System of Preference for Independent Title Agents.

Titlepro is a multi-user. multi-processor IBM-PC and Titlepro saves time. because title information is PS/2 compatible computer system designed and entered just once, and used throughout the system developed by title people for title people. without retyping. Titlepro is modular, so you may select the modules Titlepro is fully IBM-PC/XT/AT and PS/2 compatible, you need. for your binder. policy and forms and is provided on Novell Netware for the ultimate in production: for closings, disbursements and escrow multi-station performance. accounting: for indexing, Titlepro provides scheduling: for task installation and training at tracking. management your office. and courteous. reports. remittance reports. ( TITLEPRO~ dependable follow-up and more. assistance. 1-800-221-8776 In Pennsylvania call 717-299-2 100 FAX 717-293-8144 CALENDAR OF MEETINGS ALTA

1990 Group April 4-6 ALTA Mid-Year Convention, Hotel Inter-Continental, New Orleans, Louisiana Insurance April 22-24 Title Counsel Group, Washington Duke Inn, Durham, North Carolina Formed in 1957 April 29-May l ALTA Eastern Regional Trust Title Insurance Executives Meeting, The Greenbrier, White Sulphur Springs, West Virginia Full Range • Group Term Life • Comprehensive Term Medical Expense June 6 ALTA Board of Governors, of Plans •Long The Broadmoor, Colorado Springs, Disability • Dental Expense Colorado June 7-8 ALTA Southwest Regional Purchasing­ "Over 1,600 insured "The stability of the Title Insurance Executives, employees guaran­ rates has made The Broadmoor, Colorado Springs, Power Plus tee the resources to budgeting much Colorado Stability provide us with fair easier." September 30-0ctober 3 ALT A and competitive in­ Annual Convention, Hyatt surance rates." Regency, Chicago, Illinois

my ques­ 1991 Well-informed "The 4-member "Whether Representation board, composed tion involves bill­ January 14 ALTA Board of Governors, of well-known, suc­ ings, claims, or ben­ Quail Lodge, Carmel, California cessful ALTA mem­ efits, a group insur­ ance specialist will April 10-12 ALTA Mid-Year bers, ensures the Convention, San Diego Trust is always work to give me the Marriott Hotel and Marina, working in my answer - fast, and San Diego, California best interest." to my complete satisfaction." September 25-28 ALTA Annual Convention, The Westin Copley Place, Boston, Massachusetts Toll-free "When I need an­ "I can take as much Access swers, I don't waste time as I need to get 1992 time; I call my the answer to my ALTA Trust repre­ question using the March 25-27 ALTA Mid-Year toll-free number." Convention, The Mayflower sentative - direct." Hotel, Washington, DC October 14-17 ALTA Annual For More Convention, Hyatt Regency Information 1-800-346-ALTA and Maui Marriott, Illinois residents call 312-922-5000, collect Maui, Hawaii

Trust Manager Administrator Underwriter 1993 March 24-26 ALTA Mid-Year Ill Convention, The Westin mACH •• PA RH ER.Inc. Peachtree Plaza, Atlanta, Georgia

30

Now's The Time­ Order Your

ALTA Promotional Folders

Designed for easy insertion in No. 10 envelopes ... concisely informative in attractive, two-color printing

Protecting Your Interest in Real Estate Written at the home buyer level to reach the widest range of public interest. Explains why safeguarding against land title problems is essential, includes a basic discussion of how title insurance works, presents concise summaries of title hazards actually experienced, and points out that ALTA members are widely respected for their expertise. $30.00 per 100 copies

The Importance of the Abstract in Your Community Describes, in quick-read form , what an abstract is and tells about the role of abstracters in expediting real estate transac- tions. Points out that the skill and integrity of ALTA member abstracters represents an important asset to those who pur- chase and otherwise invest in real property. $17.00 per 100 copies

Buying A House of Cards? For those needing a lively, high-impact piece of promotional literature. In quick-read text, the folder makes it clear that title hazards are a sobering reality-and emphasizes the impor­ tance of owner's title insurance for home buyers. Reminds that home ownership is a major investment that can be pro­ tected by the services of ALTA member abstracters, agents and title insurers. $14.00 per 100 copies

Send checks made payable to the Association to American Land Title Association, Suite 705, 1828 L Street, N. W., Washington, DC 20036. You will be billed later for postage. Multiuser? Networking? Connectivity? '·'

With all the questions about connectivity and integrated software, it's good to know AIM: Automated lnfonnatlon that Landata has the answers. With 12 Management years of research and development • Order Entry behind their products, Landata has the • Document Preparation proven solutions to meet your title com­ • Escrow Accounting pany automation needs. Landata's auto­ • Escrow Closing mation solutions are available for DEC as well as ... VAX systems, DEC VAX workstations and • Title Plant DOS-based PCs. Over 250 title companies • Deed Mapping in 37 states depend on Landata for their • Amortization/Depreciation computing needs. • 10998 Reporting • Real Estate Information (REO Call today for your free, no obliga­ • Geographic Information tion demonstration at(713) 871-9222. Systems (GIS)

The Source for Real Estate Information 2200 West Loop South Houston, Texas 77027 (713) 871-9222

Porlland • Los Angeles • Houston • San Antonio • Tampa • West Palm Beach • Manchester, NH